* Investors await earnings from AI heavyweights; chips slide

* Fed rate decision due on Wednesday

* S&P 500 -0.24%, Nasdaq -0.56%, Dow +0.25%

(Updates with afternoon trading)

By Sinéad Carew and Noel Randewich

July 27 (Reuters) - Wall Street dipped on Monday, as

investors worried that stubbornly high oil prices could force

the Federal Reserve to raise interest rates, as they also

awaited guidance from major technology companies in a busy week

for quarterly earnings.

Microsoft ( MSFT ), Amazon ( AMZN ), Meta and Apple ( AAPL )

are set to report quarterly results this week.

Investors were questioning whether a multi-year rally fueled by

optimism about artificial intelligence may be losing steam.

Investors last week were spooked by quarterly results from

Tesla and Alphabet that showed heavy spending

on artificial intelligence.

On Monday, crude fell to a one-week low as U.S. President

Donald Trump said Washington was having "good talks" with Iran

and there was a chance of a peace deal, but warned U.S. strikes

would resume if the negotiations failed to deliver. Oil prices

surged last week, with Brent futures surpassing $100 a barrel,

after new strikes on shipping in the Middle East.

Nvidia ( NVDA ) fell 4.9% and smaller rival Advanced Micro

Devices ( AMD ) lost 7.3%, with losses in those and other

chipmakers weighing heavily on the S&P 500 and Nasdaq.

The PHLX chip index dropped 3.5% and was down about

22% from its record high close on June 22. The chip index

remains up 61% in 2026.

Chinese chipmaker CXMT Corp's stellar debut on

Monday and a report that the country has started manufacturing

homegrown DUV chipmaking tools also signaled intensifying

competition for the U.S. semiconductor industry.

Other parts of the U.S. stock market climbed, with the S&P

500 consumer staples index adding 1.7% and the health

care index up about 1%.

"Today represents a continuation of the rotational market

that we've seen," said Bill Merz, head of capital markets

research and portfolio construction at U.S. Bank Asset

Management Group. "Part of the market reaction may be related to

that creeping suspicion that perhaps a rate hike is coming."

The S&P 500 was down 0.24% at 7,394.28 points. The Nasdaq

declined 0.56% to 24,835.82 points, while the Dow Jones

Industrial Average was up 0.25% at 52,078.55 points.

Even as the S&P 500 fell, advancing issues outnumbered

falling ones within the index by a 1.6-to-one ratio.

The S&P 500 posted 28 new highs and three new lows; the Nasdaq

recorded 88 new highs and 150 new lows.

Brent crude prices slid 8% to about $89 a barrel

after Washington abruptly suspended a two-week campaign of air

strikes against Iran on Saturday in the president's latest

strategic U-turn in the five-month-old conflict.

Oil companies Occidental Petroleum ( OXY ) and Exxon Mobil

dropped 3.2% and 1.4%, respectively.

The Fed's monetary policy decision is due on Wednesday and

traders are projecting a 62% chance the central bank will leave

rates unchanged, with a 38% chance of a 25 basis-point hike,

according to the CME FedWatch tool.

The Personal Consumption Expenditures Price Index for June

is due a day after the central bank's decision and will be key

in shaping market expectations for interest rates later this

year.

Analysts on average expect S&P 500 aggregate second-quarter

earnings to jump 39% from a year ago, with AI-related stocks

accounting for much of that growth, according to LSEG I/B/E/S.

The S&P 500 is trading at around 20 times expected earnings,

compared to a 10-year average of 20, according to LSEG data.